As I’m sure you’ve heard by now, here was a major kerfuffle between Amazon and Macmillan over the weekend that is so hugely important it will necessitate the postponement of my planned “Last Week in Publishing” post. I KNOW. Didn’t Macmillan and Amazon realize the implications to my blog???
Stay with me, because I’m going to go into the weeds a bit to break this down. And to do that I need to provide some background info.
The Background Info
The whole issue revolves around e-book pricing: many publishers have long been extremely uncomfortable with the $9.99 price point that Amazon established for e-books, feeling it’s too low and acclimating consumers to a price that is, from a publishers’ perspective, unsustainable. In the words of Hachette CEO David Young when Hachette announced that they would delay some e-book releases: “I can’t sit back and watch years of building authors sold off at bargain-basement prices.”
Here’s the interesting thing about that, and something to keep in mind because it’s not often mentioned in the discussions surrounding Amazon: major publishers weren’t getting paid based on the $9.99 price point. According to the NYTimes, for a new release publishers have been receiving roughly the equivalent of half the hardcover retail price. For a $24.99 hardcover book available as an e-book for sale at $9.99, again, according to the NY Times, Amazon pays the publisher somewhere around $12.50 and uses it as a loss leader, presumably to sell Kindles.
Along comes the iPad and Apple’s “agency” model. Apple is allowing publishers to set the list price of their own titles, and they pay publishers a 70/30 split. E-books will cost no more than $14.99. This means that for a $14.99 iBook, publishers will receive $10.43. (note: Random House hasn’t come to an agreement with Apple and is still in discussions)
Do you see what’s interesting about this?? Take this hypothetical $25.00 new release hardcover. Publishers are willingly taking less money from Apple ($10.43 in our hypothetical example vs. $12.50 for Kindle) in exchange for setting what publishers feel is a more sustainable list price.
Assuming all these reports are right. Also my math.
This past week, as Macmillan CEO John Sargent explained, Macmillan told Amazon they wanted to use the Apple agency model for Kindle e-books. Essentially, Macmillan was proposing that Amazon could pay them less money per title if Amazon would let them set their own e-book prices.
Amazon reacted with what Mike Shatzkin called the “nuclear option”: they took down the buy buttons for nearly all Macmillan titles. As in: they pulled down the buy buttons not only for the e-books, but for print books as well. Some customers reported that Amazon removed Macmillan titles from their wish lists and deleted Macmillan sample chapters off of Kindles. Yowza.
The dust settled somewhat Sunday afternoon as Amazon said that they would “ultimately capitulate” to Macmillan’s demands and abide by the agency model with Macmillan, though the buy buttons have not yet, as of this writing, been reactivated. And that brings us up to speed.
Say What Now?
So. Why would a publisher willingly take less money per e-book copy sold in exchange for, essentially, the ability to charge consumers more money for an e-book? And why would Amazon react so vehemently when Macmillan was proposing that they receive more per copy?
Well, you’d have to ask them yourself to get the real answer. I have a few guesses though (and everything below should be taken as such).
Amazon’s position is relatively easy to guess at: they want e-book prices to be as low as possible to entice more people to buy Kindles and to make sure they have the lowest prices period. The more people who buy Kindles, the more people who are locked into their proprietary format, who are probably likely to stay with Amazon to buy e-books in the future, and, by the way, who may be less likely to buy paper books from a bookstore, further consolidating Amazon’s position as the dominant player in the bookselling world. They want the ability to sell products to consumers at as low a cost as possible.
Presumably, publishers are (presumably) concerned about losing control over the price of their books in the marketplace, especially when they compete with higher priced editions of the same work.
And, of course, lurking behind all of this is the iPad.
The iPad Factor
I plan on delving into the book world implications of the iPad in a later post, but one of the great ironies of the iPad, as Bloomsbury publisher Peter Ginna recently noted, is that Amazon and Apple are very likely going to be competing against each other on the very same device. Apple will be selling e-books through the iBooks store, and Amazon will (I’m guessing) make books available via its Kindle app.
This set up an interesting scenario where these models could potentially compete against each other head to head: Amazon presumably selling an iPad compatible e-book for $9.99 and Apple selling an iBook for $14.95. This led Ginna to ponder whether the iPad was actually a trojan horse for Amazon, who could use their app presence on the iPad to further corner the e-book market. Or, even if Amazon decides against making an iPad app available, they could still offer the same e-books at a lower price on the Kindle in order to retain a key Kindle selling point.
And that, I would postulate, is the one of the keys to all of this. Macmillan’s books will now be the same price on the Kindle as they are in the iBooks store on the iPad (and on the Kindle App on the iPad if Amazon goes that route). Amazon made an audacious bid to retain the ability to be the lowest priced e-book vendor for Macmillan’s books. Amazon blinked.
Oh Yeah, What About the Consumer?
This ain’t over. Not by a long shot.
As we’ve seen repeatedly in digital media (hello, music industry!), consumers are the ones who are going to have the most power to determine what the coming e-book landscape is going to look like. And this is where consumer experience and expectations, DRM, proprietary e-book formats, piracy, and competition are going to come together to dictate prices. I’m not exactly going out on a limb to say that consumers have their own expectations for what an e-book “should” cost, and these might not mesh with what a publisher thinks they “should” cost.
And as a recent NY Times article points out, customers are not exactly lacking for free or cheap e-book options. On the iPad and similar devices of the future, they’re not going to be lacking for cheap or free non-book distractions either.
You didn’t hear it from me, but they might even still want their books on paper too. Which they bought at their friendly neighborhood bookstore.
When the dust clears on all of this, will publishers regret accepting a lower price per copy in exchange for the ability to set higher prices? Or was Macmillan smart to take a stand against very low discounting to help level the playing field? Have we seen Amazon’s peak as an e-book player or will they continue to dominate the coming e-book world? Will publishers follow Macmillan’s lead or work out their own arrangements? Are you on Team Amazon or Team Macmillan? Or maybe even Team Can’t We All Just Get Along?
You tell me. I’m extremely curious to know what you think about all of this.
Sherri Nichols says
I'm on Team I Love to Read.
I have a Kindle. I've had a Kindle for almost 2 years, and I love it. I'm not wedded to the $9.99 price point, but that price has resulted in my buying more books since I had the Kindle. Why? I don't buy hardbacks, because they take up too much room, so I'd wait for the paperback. By then, for some books, I would have lost interest or forgotten about them or the reviews were mediocre or I got them from the library or borrowed them from a friend, etc. At $9.99 and the instant gratification of Whispernet, I'm much more likely to just buy the book.
And BTW, none of my wish lists were tampered with, nor were any of my samples removed from my Kindle during this Macmillan blackout. I'm not sure where that idea is coming from.
Adam Heine says
I don't know what's best for the market, but I don't like the way Amazon has been handling this at all. The fact that they're willing to not carry books bothers me a lot, as does the fact that they can delete books from people's Kindles at any time. Those two things together have turned me anti-Kindle (though not anti-eReader).
Has anyone seen the iPad video? I waaaaaaaaaaaant one!
That aside, and I guess since we're writers we're only looking at the e-book side of the iPad. But it's also going to Microsoft a run for it's money too. Too bad it can only run h one app at a time, is non-expandable, and has a maximum of 64 gigs.
Wait, I think Apple did that on purpose!. Otherwise they'd be competing with themselves. Why buy a Mac Air when you can get this really cool device?
As long as the iPad offers a word processing application, I'll buy one when it's time to replace my ultra-portable. My dreams of a Mac Air have been replaced.
Currently the E-Book market is really geared toward middle-class readers. However, historically, cell phone companies have placed technologies into the hands of users by offering a discount on the the technology in exchange for a contract. By partnering with AT&T the E-Book market is being opened up to people who wouldn't spend the money for an e-reader but who might buy a book since they have the app anyway. This device is going to make E-Books available to millions. Imagine what would have happened to sales of Twilight if kids had an e-reader?
Most kids don't have e-readers. If a family has an e-reader, its one. This spring that's going to change. Everybody has a cell-phone. It's so smart, Amazon is probably kicking themselves for not seeing it.
It's very possible that by 2011 e-books sales surpass paperback sales. Within a few years books will probably go "viral." There will be "surprise" books that sell millions of copies with little to no advertising. Book companies are going to have a lot harder time knowing which books to promote. As if that wasn't hard enough already.
There has been a lot of "The end of publishing OMG!"
After the first E-book goes viral, publishing companies be scrambling to find the next hot book.It means publishing more books. And with the low over head for e-books, there's little reason not to publish more. It'll probably reach the point that only best sellers are published on paper.
Right now the e-book market is pretty easy to get into for an author who wants to self-publish. Once corporations start making money off e-books, limits will be placed on who can publish their book. Like what happened to radio. (Otherwise big name authors will be letting go of their agents and publishers left and right. Why give would authors give up up 75% + of profits?)
Real books. With spines and covers and pages.
They can't be deleted.
That's a fact.
"Facts are stubborn things." John
Customers/consumers (me being one)want what cannot be snatched back at the whim of a contract disputer.
That's a fact Jack.
Buy more books. Drink milk.
anne vinsel says
these people are psycho! for the vast majority of consumers, BOOKS ARE OPTIONAL! if you make them too expensive, most people will not buy. period. somebody once had a rule of thumb that a hardback book should cost as much as a good restaurant meal. and that's with producing an actual object that takes materials, etc. naturally ebooks should be cheaper, since they are basically air and fairy dust. if these idiots scheme the price much past 9.99$ people will do other things, in droves. and so will i; there are many fun and free alternatives in this crappy economy.
It didn't seem to me as though the iPad even really cares about being an eReader. That seemed to be the least of its benefits.
I preordered and cancelled my cable. I'm going to watch tv via my iTunes and the network websites. On my iPad. Works great for me. Simplifies lots in my life.
This is a huge opportunity for the publishing industry to innovate and reinvent the way we interact with books and stories. So, instead of innovating and reinventing they moan about the pricing. Geesh!
This recently from AMZN
<a href="https://www.pcmag.com/article2/0,2817,2351087,00.asp:>Two Kindle users</A> – one of them a high school student – have filed a class-action lawsuit against Amazon after the company remotely deleted copies of George Orwell's "1984" from their e-readers.
In late July, Amazon CEO Jeff Bezos apologized to Kindle users after the company deleted Orwell's books from its Web site and users' Kindles without notice. Amazon did not have the rights to distribute Orwell's books, but it did not immediately reveal this fact to Kindle users who complained about the deletions.
"Our 'solution' to the problem was stupid, thoughtless, and painfully out of line with our principles," Bezos wrote to customers. "It is wholly self-inflicted, and we deserve the criticism we've received. We will use the scar tissue from this painful mistake to help make better decisions going forward, ones that match our mission."
Big Brother is at it again.
Karen Wester Newton says
The whole weekend reminded me of the Cuban Missile Crisis, too. Sadly, unlike you, Nathan, I can remember the real one (I was in elementary school, but I do remember it). Also sadly, there seemed to be more shoe-thumping Russians than JFKs.
Steve Fuller says
K.L. Brady says
I say it's a bonus because even if they sold that book to you in hardcover rather than e-book, they'd only be making $4.75 according my example.
With an e-book they're making nearly double. That's a bonus in my book. I'll sell you an ebook at twice the profit of a hardcover ANY day. Sign me up for THAT program. lol
Has anyone ever visited Kindleboards? Most of the Kindle users there tend to be VERY price sensitive. They are very happy with that 9.99 and I don't see many of them happily accepting a $3-$5 increase on e-books when they've been getting them cheaper for so long. I've seen them yell boycott for far less. But that has just been my own personal experience. But I think I'll set up a post and ask. Maybe I'm off.
I can't speak for other authors on Kindle, but I know it took me about 30 minutes, maybe an hour MAX to format my book. However, on the technologically-challenged scale–I'm not. So, perhaps that helped improve my efficiency a bit.
Nathan, excellent breakdown. I personally don't read e-books, so as a consumer, this doesn't affect me. I'm not a published author, either (yet). But these are the two groups that have the least control over what happens and the most to lose.
I like Amazon. I order from the site all the time. But to yank all electronic and print Macmillan books? As my son would say: "Harsh"
Whatever happens, I hope the authors don't suffer too much in this mess.
Becca Alden says
I don't see why they don't just do like movies have done with digital copies; you buy the book, you get a digital copy for an EReader.
I don't have one, nor do I plan on getting one, but this really does make my head hurt.
Bryant Avey says
What I hear from your post is this: Publishers are saying they want to let Apple's iBook store have a fair chance to sell their books. They believe the iBook store may eventually win, so they want to make sure Amazon is playing fair.
R. D. Allen says
I personally have little interest in a Kindle or an iPad. I'd rather have a book I can hold in my hands. It's just like the whole MP3 vs. CD thing: I like MP3s and MP3 players, but you just can't beat holding that CD in your hand and knowing its yours. Both the more compact versions have their places. They still can't compare to the original.
But as for the Macmillian/Amazon squabble: I have to side with Macmillian on this one. They should fight for their right to control the prices of their own ebooks, no matter what Amazon has to say about controlling the ebook environment.
Monopolies are fail. Enough said.
When you have to pay hundreds of dollars for a "reader," then, in my opinion, the books should be very cheap, not priced like paperbacks.
Classics should probably be even less, 1/4 of the cost of reprinted books. Then I will have the incentive for a stand alone reader. Even at 9.99, I wish they would throw in the reader for free with ten books. I'd buy the ten books and try it out and maybe get to love the reader.
Apple offers MORE than just a reader, a nicer larger size, and it's sooo shiny. Something to think differently about. Again.
Amazon, reportedly, refused to offer for sale books published by someone they disagree with. This is censorship. This is WRONG. Amazon has (in)famously censored its offerings in the past. Censorship is WRONG. I am an adult, I will decide what I would like to read (or listen to, or watch) and what I would not like to. You can have my FREEDOM OF CHOICE when you pry it from my cold, dead hands. Amazon can take a long walk off a short pier as far as I'm concerned.
Wow! There's a doozy!
Another thing I saw with the Amazon $9.99 was a scenario which I saw play out in the cruise industry.
One cruise line bought another and they wanted new lower prices with attractions providers for the line they acquired. Their argument was that their customers on one line paid that price, why shouldn't the customers on the other line?
The problem for the attractions was that they had been taking a loss on the first line because they knew people on that line wouldn't buy expensive tours.
I think I'd be afraid as a publisher that Amazon would eventually try to lower what they paid me, based on the 9.99 model, and also that customers would come to think that was what a book is worth.
Has anyone asked the porn industry? cuz, really, this is all just foreplay until they decide what format they prefer.
Peter Dudley says
What I find really interesting is that the content is being sold as the loss leader for the device. It's the old razor & blades thing turned inside out. (paper books become the disposables in this analogy)
Frankly, I am less interested in how this might affect the publishing industry (companies are not inherently entitled to survive, let alone thrive) than I am in how this might affect the creation and consumption of art in general. The ultimate logical conclusion is that all creators will be instantly in touch with all consumers. When manufacture and distribution become essentially free, the real value will be in providing search, filter, rating, and digest… essentially, clearing out the clutter for the consumer.
Donna Hole says
Anon @ 2:13p:
Now that is truly encouraging info. Thanks.
Donna Hole says
Ink: lol. I have a couple kids that aren't doing anything productive right now. Might work out for both of us.
Dedicated E-Readers are a solution to a problem that does not exist. Unlike recorded music and movies, books do not need a machine to be read. All E-books should (and eventually will) be readable on all screens, including PCs and laptops and tablets and mobile phones.If standalone E-readers survive they will probably cost no more than a couple of hardcover books, just as DVD players now cost no more than a couple of DVDs.
I bought a Kindle as soon as they became available internationally, and love it. And while I wasn't particularly thrilled with Amazon's pulling all Macmillan titles over the weekend, I could understand why they did. The publisher was telling Amazon at what price it had to sell its books.
As the article points out, Macmillan would actually get less from Apple than it does from Amazon for the same book.
As for the $9.99 price point, there are already books that sell for more than that in the Kindle store; I know, because I've bought a couple. I'd never boycott Macmillan, either, as some of our favourite authors are under their umbrella. And I've bought a couple of books by those authors in the last 24 hours, for my Kindle.
The whole thing is part of business — hey, it's called free enterprise. It will all get sorted out in the long run, and with luck, it won't include price fixing of retailer's book prices online.
Heaven knows, many bookstores have held to publisher-dictated prices — printed on the covers of the books themselves — for decades. Perhaps it's time for a little more flexibility, and not as many books will end up remaindered on $1 shelves.
By the way, the iPad will be awful for anything but glassy magazines. Reading a slick, backlit screen for an extended period of time is terrible on the eyes.
I can see that these devices are useful for travellers.
What about an e-book library system where you just rent the book for a period of time? I wouldn't like to own a lot of e-books on one fallible/stealable/breakable device.
And Imagine a world without real books – I Wonder If You Can?
Frankly, it does my soul good to see somebody smack Amazon. Even if it is the "big guys" doing the smacking. Amazon is out of control.
I know it will take years before it is even viable for me to own an e-reader – due to where I live.
But I'll throw in my 2 cents.
Many people are saying this is like any other retail debate, the big boys will hash it out, while the consumer goes about their business. But I can't help but side with Amazon on this. Their behaviour wasn't the best choice they made – but I see what they are saying.
If I purchase a product from you for $4 and retail it at 8$, good for me. Regardless of what produce all retail works the same.
The e-book pricing war should be fought between retailers (amazon and apple) not producers (Macmillan).
Retailers will eventually settle down with a price that is high enough to make profit (undercutting prices can't be done indefinately) and not so high that it scares consumers.
Macmillan is trying to ensure the sale of their paper books, by throwing their weight around in the retail of e-books. It really shouldn't get a say. If Macmillan has agree to sell their product to Amazon at set price per unit. What business is it of theirs what Amzon then retails it for? They are getting the agreed price for their product.
If they want to release the e-book after the hardcopy – then let them fight about that. If that increases the piracy rates, well that is not Amazon (or any retailers) fault. That is a risk Macmillan take in their decision on when to release the e-book.
Elizabeth Rushing says
I think we've all forgotten how important it is to purchase hardback copies from independent booksellers. iPad, Kindle… None of these devises can compete with the experience of a real book.
At first I had nothing against the Kindle. I was just happy to hear people were reading–That people continue to read and love literature is so important, and it seems, so much harder in a world where everything is digital and flickering by.
But as a novelist, I think it's important that the publishers be able to control the pricing. More and more I see Amazon as a malevolent factor in all of this.
I'm all for saving money, but I believe that spending a little more on books in independent bookstores does more good for everyone involved.
david elzey says
i think the thing that still baffles me is why the publishers aren't selling ebooks directly and eliminating the amazonian middleman.
or is that just too easy a solution?
Lots of myths flying around.
1. you can download your Kindle purchases to your computer. Amazon can't reach in to your computer and swipe it back.
2. you can download books to your Kindle from other sites. You can also use freeware and break DRM, you can convert files.
3. which leads us to piracy. I'm on Team Let's Just See What The Consumers Decide, Shall We? Because ultimately the prices of e-books will be set by sales.
My fear is MacMillian is wrong. You can think Amazon is throwing a tantrum, you can believe they're bullies, but what if MM is WRONG and consumers will not pay more? Consumers on there are already zapping authors with one-star reviews for delaying releases. What if they decide they won't pay more?
And frankly, why would they when they're are now tons of piracy sites where they can get books for free?
MacMillian is playing a dangerous game. Bicker with Amazon all you want-but WHAT IF THEY'RE MISJUDGING THE CONSUMER?
What then. For publishing, for authors. What then.
Another author's POV:
Allison Gustavson says
I think this whole situation serves to nicely destroy the (fragile) myth of your "friendly neighborhood [online] superstore"; the bottom line has been truly laid bare. This would ideally be translated into a shifting of loyalties on the part of the consumer, wherever those loyalties lie. I will thus henceforth refrain from using the Kindle app on my iPhone. As with everything else, it is up to the consumer to make conscious, educated choices and speak their minds with their dollars.
Congratulations on presenting this issue with as much objectivity as possible. Honestly, this is the only article I have read on the issue that has provided me with both sides of the coin.
I understand the idea of Macmillan leveling the playing field, wherein they are able to maintain control over their own pricing strategies over their own products. Even if it does mean a lower take per title. It still allows them to have control over placing a value over their own product.
At the end of the day, the end result really does remain in the consumer's hands. It's actually their reception of the Kindle or the IPad that will dictate and reveal who the true winner of the the e-book v i-book debacle.
I sure hope the consumer wins in the end.
Kathleen MacIver says
I have no idea whose side I'm on.
I understand that printing, mailing, and return allowances are only a portion of the cost of printing a book. It seems like the "right" cost for an e-book should be print price minus printing, shipping, and return costs.
But here's another point that no one has mentioned. The shift to e-books is going to be gradual. Let's say that right now a book sells 20,000 print and 1,000 ebooks. If they deduct the printing costs from those 1,000 ebooks, then the costs to print are spread between profits on 20,000 print books. But what about in six years? What if they're then selling only 2,000 print books and 19,000 ebooks? The costs to print CANNOT be covered by only 2,000 print books, because it does not cost 10x as much to print 20,000 as it costs to print 2,000.
Until publishers switch to POD, they'll have the same massive costs to set up a printer and set all the bookplates, etc. for every book, regardless of how many print books are sold. Therefore they HAVE to take money from the sale of ebooks to cover print books. Therefore they cannot price ebooks as low as we think they should…unless the book is published in ebook form exclusively.
That instant-printing-book-machine (can't remember it's name) and technology like it will become more of a player as the ratio of print-to-ebook sales shifts, I think. For then it will allow publishers to put the costs for book printing solely on the sales of print books.
No matter what, I'm not worried about them finding something sustainable. People aren't going to quit writing books and buying them. Not completely. The ultimate decision on all of this will be made by the consumer and the authors. The publishers are the middlemen who have to make a profit based on what authors are willing to accept and readers are willing to pay.
I don't see that it matters who is setting prices. If no one's willing to pay $14.99/ebook, then it hardly matters who set that price. The company will realize it's not sustainable.
There are simply too many factors at work to say how it "should" be, among them:
– What royalty rates authors will accept
– How many readers are willing/able to cough up the money for various e-readers, since the cost of e-books doesn't much matter to those of us who can't afford the readers
– How quickly cheap knock-off e-readers become available. I only switched to downloading mp3s when I could afford a mp3 player.
– How many formats become standard
– Where the DRM battles end…which might affect cheaper ereaders, if they're anything like the cheap mp3 players that couldn't play some music files.
– Whether readers and authors successfully discover ways to connect without needing publishers
– And possibly whatever Adobe comes out with, since plenty of us are currently satisfied with pdf versions of ebooks! Personally…if Adobe came out with an inexpensive e-reader that allowed me to re-format the text so that it was more readable than they are on my phone without so much scrolling, I'd go for that!
Chuck H. says
Don't own an e-reader. Don't intend to buy one. I'll just sit back with my leather bound, printed on archive paper classics and thumb my nose as the war goes on.
What Amazon Knows
When ebooks are perceived to be overpriced consumers resort to piracy. The same thing happened with music — until Apple came up with the solution: The 99 cent iTune, sold in a convenient and easy-to-use online store, vertically integrated with hardware and software.
Amazon has the iTunes model — vertically integrated hardware AND apps that can be used on other devices (PCs, iPhone, iPod Touch, and now the iPad), a great user interface, and a pricing structure (trying to place all products at price points at or below 9.99) to discourage piracy and maximize legitimate book sales.
The question is whether the publishers want to sell a high volume — at a consumer friendly price — OR set a high price, and give away most copies for free (piracy ensues), resulting in lower revenues for them AND Amazon.
The music industry tried that game (setting digital prices to match price of physical media in a last ditch attempt to protect their CD sales in physical stores). It didn't work. What makes the book industry think it will be different?
The marketing analysts at Amazon aren't dummies. They are looking to maximize profits for themselves and their vendors. They are playing to win. The alternative is that everyone in the chain loses.
Recent history (music industry experience) would suggest that Amazon is taking the better approach to protecting and growing the publishing industry in the digital age.
Jobs fought the battle with the recording industry; it appears he isn't going to expend the energy to do it with publishers . . . the ereader is not the primary function of the iPad device (as music was with the iPod). He doesn't have a skin in this game . . . he'll stand back and let Amazon fight this battle. He has better things to do with his creative efforts.
Or was Macmillan smart to take a stand against very low discounting to help level the playing field?
Macmillan is very smart to take a stand against amazon.com telling them how to price Macmillan's own products.
It is NOT a stand against low discounting. It is a stand against the middleman dictating the control of product pricing (to the overall effect of benefiting the middleman and damaging the publisher).
I stand with the Authors Guild on this one.
I just switched all my amazon.com accounts to B&N on-line. Thank god, I didn't buy a Kindle. I would have to throw it away, if I had.
I wouldn't want an agent right now sides with amazon.com. I don't mean to be offensive, but the Authors Guild has made it clear that amazon.com winning this one is BAD for authors. Agents are supposed to work for authors, no?
Why linger in the middle ground, Nathan? The future is now. This isn't hard t figure out. You with us or agin us?
Nathan Bransford says
Us vs. them is never a paradigm that I've found very persuasive.
Amazon.com just announced a 70% royalty deal for authors, starting in June. They are giving 35% of cover price today.
How is this bad for authors?
Anon 9:02 AM
"Recent history (music industry experience) would suggest that Amazon is taking the better approach to protecting and growing the publishing industry in the digital age."
Recent history suggests that amazon.com is taking the better approach to protecting and growing amazon.com. Nothing else.
If you haven't noticed, they're a "publisher" now. 4 books, then 40 books, then 400 books they can price anyway they want to and meanwhile tell other publishers how they must price their products?
That's good for everybody?
Moira Young says
Author Shanna Swendson weighed in today with a really good point: we need to separate the concept of the book in its physical form from what it really is (i.e., a transmission of ideas from the author to the reader). Thought I'd share. 🙂
It isn't good for the industry when pricing forces consumers to resort to piracy.
Like Jobs and Apple, Amazon has done extensive market research (they have a huge database of sales to crunch the numbers on) to prove that pricing over 9.99 results in significant buyer fall off.
What are those buyers doing instead? Can you say torrent?
Yes, Amazon will do what is good for Amazon, and that is to sell books. But that is also good for publishers (I'm pretty sure they want to sell books too). The difference is that the publishers believe they are protecting their hardcover business by setting high prices for ebooks (more than the consumer wants to pay). The truth is that these consumers won't pay the high price for hardcover either . . . they have already switched to the digital paradigm, ergo they will find the book in digital format, and if that's free so be it. Or they will substitute a different, cheaper book (after all, there are millions of books to read, and plenty of books priced in the 0-$5 range on Kindle store).
In the end the publisher who insists on high ebook prices doesn't gain a $15 sale at the local B&N store; instead they lose a 9.99 digital sale.
Under the overpriced digital book scheme the consumer wins (finds a free copy online, goes to the library, or buys something else), but writer, agent, publisher AND Amazon lose.
The Pollinatrix says
Nathan at 9:27 – Amen to that! I'm jumping up and down and applauding right now. Eminently quotable, I might add.
Moira Young, thanks so much for posting that link. It is exactly what I have been arguing ever since this whole dispute began.
It's really disheartening, as a writer, to see so many people who profess to be "readers" so ready to dismiss the content as if it were some interchangeable commodity that has no value beyond its packaging. I don't get it.
Thanks for the post – I didn't realize that Amazon was actually taking a loss on all of those sales to set customer expectation there. I'm rooting for Macmillon here. And Macmillon's authors.
Of course there are differences in content between books, but the consumer doesn't always see it that way. The mainstream publishers are partly to blame for the "interchangeable commodity" mentality, especially at the midlist, genre fiction level. "Hey, if you like Author X you'll also like Author Y." Implied: The books are formulaic anyway!
To a great degree this is true.Take romance, or thrillers, or paranormal, or detective stories for example. You may follow a favorite author, but there are plenty of others writing similar stuff. Even within an author's works you'll find just six or seven basic plot lines, so even an author "commoditizes" their own work. How many times have you read a book and said, "I've read this before?". With some authors it happens to me all the time!
Take a look at how indie authors are taking advantage of this fact, and cleaning up on Kindle store in genre fiction categories. They set their prices lower, and they are selling very well. Konrath comes to mind, and a number of others in the fantasy, techno-thriller, and even romance categories. They are writing good stories and pricing them competitively. Yes, to some degree these are seen as commodity genres. Content and style are important, but for most readers there are many authors who will "fit the bill".
My own pricing experiments have shown elasticity to be quite high . . . I sell 20 times as many books at 99 cents as I sold at 3.99. I'm making a LOT more money at the lower price. Yes, Amazon wants to sell more books at a lower price . . . it is far more profitable for them and the publishers. This is a no brainer. My own limited sales data are proving this point.
Amazon's position is driven by millions of data points and hard analysis. Macmillan's position is driven by a desire to protect their hardcover business. While that's a profitable position for Mcmillan right now, it probably won't be in five years, as digital book sales grow. Amazon's position is more forward looking. Macmillan is still operating in the past, and it will eventually bite them in the arse.
I understand McMillan's dilemma. They are trying to buy some time to weather the transition, but Amazon is on the right side of this from a business perspective.
I will always prefer the smell of glued paperback bindings and crisp pages. Note: I'm not old, I'm 24.
Kindle/IPad products will never replace real books. People who really love reading are sentimental about things like that.
I don't really believe in comparing the publishing industry to the music industry, but STILL…
the practical use of mp3 players is to store all the songs you might want to cycle through in one sitting.
who the hell wants to cycle through 1800 (or 5 days worth of, or 8.5 gigabytes worth of) ebooks? Who's going to read them on random?
ereaders are only practical for agents / editors / publishers / people in the business who might need to carry around gigabytes worth of manuscripts and books.